Reference no: EM131641713

Problem - Frank Harold is a sole proprietor running an advertising agency with two employees, Helen and Carolyn. Frank decides to relocate his business from New Wilmington to Ellwood City, and Helen and Carolyn agree to relocate as well. All three decide to move their families to Ellwood City. Frank agreed to reimburse Helen and Carolyn for their moving expenses.

(a) Carolyn's old residence was 13 miles from the old job location, and the new job location is 71 miles from her old residence. Once in Ellwood City, Carolyn works full-time for the next 2 years. What are the federal income tax consequences for Carolyn and Frank regarding the reimbursement of Carolyn's moving expenses?

(b) Helen's old residence was 8 miles from the old job location, and the new job location is 60 miles from her old residence. Once in Ellwood City, Helen works full-time for the first 52 weeks, but she works only part-time after that. What are the federal income tax consequences for Helen and Frank regarding the reimbursement of Helen's moving expenses?

(c) Frank's old residence was 10 miles from the old job location, and the new job location is 75 miles from his old residence. Once in Ellwood City, Frank works full-time for the next 52 weeks; however, he only works full-time 20 of the following 52 weeks. What are the federal income tax consequences to Frank regarding his qualified moving expenses?